Gwyneth Jones' Bold as Love is the first in a series that consists, to date, of three novels (the second and third, Castles Made of Sand and Midnight Lamp, also take their titles from songs by Jimi Hendrix), with a further two volumes projected. It's set at the dawn of the new dark ages, a dystopian future England that's chronologically close enough to happen within the lives of many of its readers. The Gulf Stream has switched itself off, and the climate is colder and wetter than it's been for centuries. The population has peaked and is in decline. The Union has been dissolved – thus England, rather than the United Kingdom. The Royal Family has fled to warmer climes. There's civil war in Yorkshire, and French fighter jets are flying low over Ilkley Moor: they make a sound like tearing silk. Eco-terrorists have napalmed the wheatfields of East Anglia, and bombed the motorways. The Celtics are practicing animal sacrifice, or maybe something worse. The Prime Minister is a pierced and mohawked raver with far-right tendencies and cunning advisors, and the Minister for Gigs habitually appears in public in the guise of a living Halloween decoration, his face concealed behind a digitally-generated skull mask, rosy with blood.

Dystopia or Utopia? The latter for some of the characters, and perhaps for admirers of the rock'n'roll lifestyle, the counterculture, or the quintessentially postmodern art of the remix. This is a future that embraces the wonderful and the weird, that picks up on a multitude of pop-culture fantasies, late-night reorderings of the British political system, classic songs and neo-mythic resonances: runs with them all, recreates and recasts them and presents the results with a flourish and an elaborate bow. Gwyneth Jones – better-known for complex, intense science fiction, her novels often having a pronounced feminist stance – is the court jester of Camelot who leads her readers a merry romp through the Guinness Book of Hit Singles, Shakespeare's A Midsummer Night's Dream and the Ramayana, via magical technology and Clarke's Law, round and round King Arthur's Table, and upward and inward towards a promised Nirvana, a Holy Grail, which remains just out of sight, tantalisingly unattainable, throughout Bold as Love.

This is a future where the Oasis song 'Wonderwall' is as much a classic as 'Hey Jude': where a rock star can become Dictator – Ax Preston, lumbered by his father with the forename 'Axl', after the lead singer of rock band Guns'n'Roses, won't accept any other title – and can turn an economic and social catastrophe around into a green revolution founded on countercultural ethics. "We'll give them rock'n'roll for heavy medication, voluntary work as routine antidepressants ... As we all know only too well, human beings will do any fucking thing, no limit, if it is seen to be normal and taken for granted, and the role-models say it's okay."

It's a precarious peace. There are no easy answers here: there may never be easy answers, in the Bold as Love future, for the problems which Jones imposes on her characters, and Bold as Love is only the beginning of the story. But Ax Preston's solution works for most of the people, most of the time. Under his rule, England becomes a haven of peace in an increasingly violent, war-torn Europe. Catastrophe after catastrophe – superstorms, two bad winters, a refugee armada from Europe that's nearly half a million strong, not to mention scandal and corruption (and worse) within the government – is averted, or dealt with, or simply survived. What does not destroy us makes us stronger.

This is a future made possible by the Band-Aid generation and 'the day music changed the world': it's founded less on the idealistic dreams of the hippie generation than on the positive actions of those who've used popular music to raise funds, attract attention to a cause, make a difference. It's not all sweetness and light and cheering crowds. Jones portrays a future England in which Tony Blair's vision of a right-on Labour government, hobnobbing with rock stars and talking to the disaffected young, has gone nightmarishly wrong.

It all starts at an LSE thinktank, where Home Secretary Paul Javert has gathered together a group of counter-culture celebrities to ask them their views on the future of Britain. In doing so, he sows the seeds of his own destruction: before the year is out, Javert will fall before Saul Burnet (alias Pigsty) and his thugs. Later, in the 'Disney version' concocted by government and media for the masses, Pigsty will take office as President, with the Counter-Cultural Movement (CCM) firmly in control of England by Dissolution Day, when the United Kingdom is dissolved after three centuries of union. The new dark ages have begun, with Pigsty's minions committing reassuringly bloodless atrocities – smashing supermarkets, bombing motorways, destroying GM crops – in a green Blitzkrieg. And three individuals, brought together by the CCM, are sizing one another up, learning one another's limits and skills and hopes and fears.

Fiorinda is a rock'n'roll princess, unacknowledged daughter of an ageing rock icon, grimly determined to achieve fame in her own right. Sage is a eurobillionaire recording artist, a groundbreaker of Jones' innovatory IMMix – a technological son et lumiere which marries techno music and spectacular visual displays that play on the brain's ability to see what isn't there. Ax Preston's career, to date, is that of a serious musician who's achieved success despite himself, and has a reputation for political involvement. This unlikely trio is the focus of Bold as Love, playing out a classically tragic romance against the backdrop of a dark future.

The book is not just dark on the political front. It opens with a chapter entitled 'The Saltbox', which, when published in Interzone #169 (July 2001), provoked accusations of obscenity: Jones was accused of inciting paedophiles, and was reported to the police. No action was taken. The chapter, described by its author as a 'dark fairytale', focuses on sexual abuse, though without sensationalism or prurience. ('He took her in his arms and carried her off to his own room, which was sumptuous, but she didn't get a chance to take much in'; that's as close as it comes to a sex scene.) What happens to Fiorinda scars her for life: it also prefigures more horrific events later in the novel. Pigsty's Government ultimately falls, not because of his revolutionary policies or because of the eco-terrorism carried out by a 'barmy army' of young men who've finally found a cause to fight for, but because his darkest secret is uncovered. A survivor of abuse himself, Pigsty has perpetuated the cycle, and children have died. A kind of vigilantist justice is served on Pigsty, but Fiorinda makes it clear that this solves nothing, that it's just more of the same. Legislation doesn't work, violence doesn't work: the only solution is to mend what is broken.

The story so far may seem firmly rooted in present-day Britain: indeed, it could be argued that Jones' near-future England is already closer, in the sense of 'more probable', than it was at the book's publication in 2001. The cult of celebrity is on the rise: the popular press, at least, seems ever more set on uncovering the rot at the heart of the socio-political system, every week bringing a fresh exposé of some public figure's secret shame. Some parts of Bold as Love may already be out of date – Railtrack no longer exists, for example – but the novel's setting is an England furnished with recognisable landmarks. Buckingham Palace has been reinvented as the Insanitude nightclub. The same high street names ("Asda? You mean Walmart!") persist.

But this is not our England. This is a future where the world is becoming stranger. Boots the Chemist and Sainsbury's have survived the worst of the mob violence: however, Boots is selling cantrips, and you can buy magic in Sainsbury's. Fiorinda, much to her own disgust, has emergent magical powers: a substantial thread of the plot concerns her reluctance to use, or even admit to, these, and their nature remains unexplored in Bold as Love. "Magic has no place in a civilised society," she says contemptuously, but society is no longer so very civilised, and strange times bring strange gifts. Technology – at least in England, which is very much the focus of Bold as Love, though later novels pan out to show more of the world – is in decline, and the peak of civilisation seems to have passed. Magic is no replacement, being too unpredictable and non-linear and unexpected, but it is nevertheless on the rise, though initially its effects seem small and insignificant.

Perhaps it's a blessing in disguise that England has been isolated from the rest of the world by the Ivan/Lara virus, a hybrid computer virus that has surpassed the wildest dreams of its creators – unknown to one another until the crisis – and infected networks all over Europe. It's a virus capable of destroying modern civilisation, far beyond the intentions of either virus-writer, and like a plague epidemic it has to be stopped. The Internet Commission decides to "cut the undersea cables, fry the earth stations, police the ionosphere": the result is a clear-water firewall around Europe, as thorny as the briars in a fairytale, quarantining the infection until the networks can be rebuilt. And no infrastructure capable of that project has survived the events of the last few years.

Entirely isolated from new technology, as well as from cultural and social influences, the Matter of Britain – well, England – seems bleak. But Ax Preston, Dictator, has unwavering faith in his people, and his friends, and the brave new world that is taking shape under the benevolent anarchy of the Rock'n'Roll Reich. Some technology has survived, or remained, and a whole new science is being developed by a middle-aged Welsh-Indian biologist, Olwen Devi, and her Zen Self team – a science that uses human metabolic power, and is based on the synchronicity between Self and the World. "When technology – applied science – becomes magical, what does magic become?" Olwen asks Ax, but Ax has no answer for her.

Magic has no place in a civilised society. But magic, and the technology that mimics it, is intrinsic to this fantastical future rooted in 'a once and future landscape of meres and marshes and hilltop towns'. That phrasing is surely not accidental ('once and future' echoing the title of T H White's Arthurian tetralogy ), for Ax, at least, knows which myth he's living. In one of his band's earliest videos, he pulled a sword from a stone: later in the series, he throws the Sweet Track Jade (a ceremonial stone axe from the Neolithic period) into the sea, and half-expects to see an arm clad in white samite rising from the waters to catch it.

The historical Arthur (if indeed he was ever more than a patriotic myth) was likely a post-Roman dux bellorum, war-leader – a title bestowed by Olwen Devi upon Ax at their first meeting – who united the remains of Romano-British civilisation against barbarians and marauders from over the sea. It's a role that Ax accepts reluctantly after Pigsty's demise. Throughout his time as Dictator, he's firefighting: "if we can just get through this part," he says, again and again, as though repetition of this mantra will confer success. Ax is a dreamer, and he dreams of keeping the lamps lit, breaking on through to the other side, making this turning-point in England's history the beginning of a new kind of civilisation – one based on the selfish/selfless hippie ideals of his father's generation – rather than a plunge into the Dark Ages. (It's not by chance that there's a map of fifth-century Europe, reshaped by the fall of the Roman Empire, pinned on the wall at the Insanitude.)

If Ax is Arthur, then Fiorinda is his Guinevere: a girl who grows up all unknowing of her magical heritage, who's cheated and used and abused, but who rescues herself and reclaims her birthright, and in the process becomes not only a figurehead but a paradoxically barren mother to a nation. And Sage, who first appears in opposition to Ax but later finds himself in harmony with Ax's ideas (and strangely fascinated by the man himself), is surely Lancelot, right down to his helpless protective love for Fiorinda. But if Sage is Lancelot, the strong right arm in battle, he also embodies some aspects of Merlin – the wise counsellor, the keeper of sacred knowledge, and the master of illusion. Sage's IMMix productions, displayed before an enraptured audience of drunken revellers, are no less a magical spectacle than any of the magical visions with which Merlin entertained Arthur's court at Christmastide.

Olwen Devi is another candidate for the Merlin role, and her sweetly transcendent Zen Self is a finer Holy Grail than any of those to be found in formulaic fantasy quests. (Though is the Ring on her finger, an interface to the AI Serendip, a nod to Tolkien's fantasy classic?) There are three queens, too, though they appear first, in a setting that prompts Fiorinda to think of them as the witches from Macbeth, as a Goddess-triumvirate of witches; they may also manifest as the three Eyes (a post-Motown vocal trio). Other characters slip into and out of mythological stereotypes: Allie Marlowe as a kingmaker to rival Morgan le Fay, whose less malevolent sorcery is mirrored in Ann-Marie's comfortably claustrophobic New Age magic.

There's much more in the mix, from pop culture to the real classics. Chip and Verlaine, Fiorinda's charmingly naïve champions, like the thought of themselves as Merry and Pippin. The music journalists who cover the Rock the Boat tour, when the refugee armada is welcomed to Humberside with free festivals and holiday-camp accommodation, are Mulder and Scully. Indian mixmaster Dilip casts the Triumvirate as characters from the Ramayana: Rama, Sita and Lakshmana. Fiorinda's likened to Shakespeare's Titania – with Ax, presumably, as Oberon, and Sage as trickster-spirit Puck – and sometimes, whether she's consciously playing the role or not, to Titania's real-world analogue, the first Queen Elizabeth:

"About four hundred and thirty years ago, another Armada set out to invade our country ... That summer, people told the queen of England she should stay indoors, hide behind bodyguards, for fear of the mob. People have been saying the same to me. Well, I'm not the queen of England, I'm just a singer with a rock'n'roll band. Hey, let tyrants fear."

The Arthurian echoes are the strongest, though, for they're picked up and amplified again and again. The dishes at Goonhilly Earth Station – mute and dead after the Internet Commission's draconian action – bear the names of Guinevere and Lancelot, Merlin and Arthur and Uther. Sage's retreat in Cornwall (Tyller Pystri, 'the magic place') is just up the road from Tintagel.

Ax Preston acknowledges the Arthurian myth, and plays on it when necessary, but he doesn't allow it to limit him. Mixed-race himself – with the heritage of bullying and implicit racism that his dark skin provokes in small-town England – he refuses to perpetuate the outdated and unworkable myth of an Anglo-Saxon England. His audacious solution to the 'problem' of Islam – the civil war that's broken out in Yorkshire, with the Islamics not at all sure that they want to be part of the new England – is to declare his Islam, to become a Muslim. It's not an empty gesture, and he is fortunate to engage the interest and sympathy of Sayyid Muhammed Zayid, de facto leader of Muslim Yorkshire. More, it's a sign of solidarity, not only with the rebel Muslims, but with everyone who's felt excluded by the Caucasian elements of English society.

The Arthurian myth is just one of several underlying myths that influence, but do not shape, Bold as Love. As the first in a series, the novel can't be expected to provide much in the way of resolution. The final chapter does not feature an apocalyptic battle, or a happy ending, or any kind of quick fix: rather, it focuses on Ax's inauguration as Dictator.

"The office of dictator was instituted around 501BC to meet a crisis in the state of Ancient Rome that was beyond the control of the two consuls: a short-term constitutional appointment ... Modern usage finds the name tarnished and sinister. We all wish that he'd let us call him something nice, something anodyne and comfortable, like 'President'. But these are not anodyne, nice or comfortable times. Ax is right to make us face the reality of our situation. We've come much closer to the brink of anarchy than the other nations of Britain, but ... we've held our ground."

The Inauguration takes place at a set-piece rock festival, a spectacular celebration-masque that might be read as self-indulgent if this were truly the end of the story. Here Jones throws together, in a literal mix, mythology and rock'n'roll and magical technology in a neat summation of everything that's been lost, and everything that remains. England has held its ground: the Counter-Cultural Movement has survived the extremes of its beginning in that LSE think-tank, and the atrocities, crimes and abuse that marred its first years. England has survived, and though it's no longer a world power – economically, politically or culturally – it is once more at peace. The peace may be precarious, but it's built on solid foundations that borrow from socialism, philanthropy and age-old belief systems, all shot through with magic and mayhem and joie de vivre. The future may not be bright, but it's unlikely to be dull. And, as the new era of benevolent Dictatorship dawns after a stormy night, it's very clear that there's more to come: that this is merely the end of the beginning.

There can hardly be a stranger commodity in the world than books. Printed by people who don't understand them; sold by people who don't understand them; bound, criticised and read by people who don't understand them, and now even written by people who don't understand them.